PTSB grabs mortgage market share as new lending jumps 48%

PTSB reiterated that it is committed to reducing the non-performing loans ratio to a single-digit percentage in the “medium term, as per regulatory guidelines, while protecting capital”. Photograph: Alan Betson

Mortgage lender Permanent TSB (PTSB) said on Thursday that its new lending volume increased 48 per cent to €1 billion in the first nine months of the year as it grabbed a greater slice of the home loans market.

The 75 per cent State-owned group’s share of new mortgage lending during the period rose to 14.7 per cent in the third quarter of 2018 from 13.8 per cent for the first half, it said in a trading statement. Still its level of performing loans rose by only €100 million during the three months to €15.3 billion, as borrowers continued to repay debt at pace.

“Business and financial performance continues to trend in line with expectations,” said the bank, led by chief executive Jeremy Masding. “While the mortgage market in Ireland continues to grow steadily, it remains competitive. We continue to carefully manage our offering, maintaining price discipline and credit underwriting standards.”

Goodbody Stockbrokers analyst Eamonn Hughes said the bank’s current share of new lending in the mortgage market, which had been as low as 2 per cent during the financial crisis, “is a bit stronger than we anticipated”.

PTSB, which is grappling with the highest level of non-performing loans (NPLs) among bailed-out Irish banks, agreed in July to sell €2.1 billion of mortgages to Start Mortgages, an affiliate of US private equity firm Lone Star, in a deal to reduce its non-performing loans ratio from 25 per cent to 16 per cent. That is still well above the 3.5 per cent European Union average that regulators are pressing banks to move towards.

Non-performing loans

The bank said on Thursday that it reduced its non-performing loans by a further €100 million during the third quarter, mainly as previously restructured mortgages progressed into the “performing loans” category. Completion of the €2.1 billion loan portfolio sale, known as Project Glas, “continues to progress in line with management expectations,” it said.

PTSB reiterated that it is committed to reducing the non-performing loans ratio to a single-digit percentage in the “medium term, as per regulatory guidelines, while protecting capital”.

The Irish Times has previously reported that PTSB is planning to shift €1.5 billion of non-performing loans off its balance sheet in a bond refinancing called an off-balance sheet mortgage securitisation. Most of these loans are split mortgages, where repayments on part of the loan is frozen until a future date, but continue to be classified as non-performing loans as per European regulatory guidelines.

Moody’s, one of the world’s leading credit ratings agencies, said on Thursday that the largest Irish banks will have to shed €9 billion of non-performing loans to bring their ratios into line with the European average.

Meanwhile, PTSB said its common equity Tier 1 capital, a gauge of a bank’s reserves to withstand a shock loss, rose to 13.9 per cent by the end of September from 13.4 per cent three months earlier, mainly as a result of profits earned during the third quarter.

Davy analysts said that the rate of capital growth was greater than they expected. Shares in the bank rose as much as 3.3 per cent.